Mumbai: Indian stock market may reel under pressure when it opens for trading on Wednesday after Prime Minister Narendra Modi extended the nationwide lockdown till May 3 to curb the spread of novel coronavirus.
Modi said certain relaxations can be given in areas that have shown promise in fighting the disease. An assessment will be done for next one week in all towns, districts and states based on which the relaxations can be given.
The 21-day national lockdown was scheduled to end on Tuesday, April 14.
Total coronavirus cases in the country surged past the 10,000 mark today, making it more important that the gains achieved so far in terms of containing the spread are not erased.
“It is difficult to say how much pressure the market will see when it opens for trading tomorrow. But, the market is seeing thin volumes anyway and there has been no meaningful participation,” said Deven Choksey, Group Managing Director, KR Choksey Investment Manager
“Economic activity is being promised to start from April 20 in a phased manner. That should provide some relief. Fortunately, the harvesting part is already happening in rural India,” he said.
For the year to date, benchmark equity indices Sensex and Nifty are still down 25.61 per cent and 26.09 per cent respectively, as coronavirus pandemic has triggered a flight to safety.
In recent times, the market has been very volatile, as it has taken cues from stimulus measures provided by governments and central banks, while keeping a close watch on the spread of coronavirus locally and globally.
Foreign institutional investors (FIIs) have sold a net of $6.6 billion of Indian shares for the year-to-date period, as risk has been off the table.
Amar Ambani, Senior President & Head of Institutional Research at YES Securities, said the market was already was expecting an extension to this lockdown. “This is largely on expected lines. So, I don’t see incremental impact from this development. However, the fact that new cases are surfacing globally, and even people who are cured are testing positive will bother the markets,” said Ambani.
He said the market was pinning hopes that the government would come up with stimulus measures and that should come up sooner rather than later. “If that doesn’t come in soon, we could see more damage to the market,” he added.
A few were optimistic.
“He (Modi) is at least talking of a road map. I don’t think the market will be too disappointed. It is to ensure that we don’t suffer more in the longer run,” said independent analyst Ambareesh Baliga.
“The biggest fear is another round of Covid. We need to ensure that it stops with this,” he said. “We already had a sense of extension with few states announcing it already. Hopefully, the relaxation, when happens, should help the poor earn their livelihood,” he said.
